Copper Supply Seen by Luvata at Highest in More Than 7 Years

March 4 (Bloomberg) -- Copper supply is the highest in at
least seven years, according to Bob Kickham, senior vice-president for procurement at Luvata, the maker of copper parts
used in items such as fridges and wind turbines.

“We’ve seen a very good availability of copper in the
market,” Kickham said in an interview on March 1. There is
“more available copper on the market than we’ve seen at this
time in the seven years I’ve been in the industry. Typically the
first quarter is a time when there is a lot of copper around,
but there is even more copper around this first quarter.”

Refined copper supply will expand 3.4 percent to 20.8
million metric tons this year, exceeding demand by 56,000 tons,
according to a Barclays Plc. report on Feb. 15. Copper
stockpiles in warehouses monitored by the London Metal Exchange
have more than doubled since October and are at the highest
since Oct. 10, 2011. Luvata buys about 200,000 tons of copper
each year on a one-year basis and on the immediate-delivery
market, according to Kickham.

Brentford, England-based Luvata, whose customers include
Siemens AG and Samsung Electronics Co., will be buying more
copper this year than in 2012, Kickham said at the company’s
headquarters. Asia accounted for 37 percent of Luvata’s sales
last year, while the Americas made up 35 percent, with the
remainder in Europe, according to the company. Copper producers
will add 646,000 tons of mined supply this year, amounting to
3.8 percent growth, Standard Bank Plc estimates. Output grew 4.3
percent last year, according to the bank.

“We took a view that there will be an oversupply in the
market and therefore we have an appetite for spot material,”
Kickham said. “We have some material to buy and we’ll buy at
spot and we will be advantaged in that spot price.”

Premiums Cut

The premium added to the price of the metal for immediate
delivery on the LME was quoted at as low as $55 a ton in
February, from a median $80 a ton in January, according to
traders. Codelco, the world’s largest copper producer, cut the
premium charged to European buyers this year to $85 a ton, while
Aurubis AG, the second largest, offered copper at a premium of
$86 a ton.

Copper inventories in LME-tracked warehouses climbed for a
13th session to 462,400 tons, data showed today. Stockpiles have
swollen on deliveries in New Orleans, the Belgian city of
Antwerp and Johor, Malaysia. Further increases will depend on
the sort of incentives warehouses offer to attract metal under
their sheds as well as the oversupply, Kickham said.

Growth

“We are seeing it grow up to 500,000 tons,” Kickham said.
It will be interesting to see how quickly it gets there and how
much further it goes, he said.

New Orleans, Antwerp and Johor account for 68 percent of
the global LME inventory as of today, and are locations affected
by long waits for metal, according to Credit Suisse Group AG.

“It’s strange when you see warehouses paying very large
premiums to get stuff to sit behind queues,” Kickham said.
“That has a potential to distort this natural underlying
balance.”